Trade ruling expected to help Glatfelter
CHILLICOTHE - As Ohio's two senators touted a trade ruling announced this week that would benefit Ohio paper mills such as the one in Chillicothe, Glatfelter announced a solid economic finish to a challenging 2015.
The U.S. Department of Commerce ruling dealt with what Sens. Sherrod Brown and Rob Portman said has been illegal dumping of uncoated paper imports from Australia, Brazil, China, Indonesia and Portugal. That dumping, along with government subsidies provided to China and Indonesia in particular, has created a situation in which the foreign competition has been dramatically underselling domestic producers and depressing prices, according to a letter sent by 16 senators in March of last year to Meredith Broadbent, chair of the U.S. International Trade Commission.
Dumping involves a foreign company attempting to sell a product in the United States at prices below market value, creating an unfair marketplace for domestic producers.
The ruling announced Tuesday is expected to have a positive impact on Ohio paper mills such as Glatfelter, Domtar in Washington Court House and Mohawk Fine Papers in Hamilton, Brown and Portman said. According to the ITC, Glatfelter and Domtar were among those that petitioned the government for an investigation.
"Paper producers in Ohio and across the country have been hit by unfairly traded imports in the uncoated paper industry," Brown said. "This decision shows our workers that our government stands ready to crack down on countries that cheat our trade laws, cost us jobs and jeopardize our market share."
"American workers are in dire need of relief from these unfairly subsidized and undersold imports that hurt Ohio jobs," Portman said. "I'm pleased with today's ruling and will continue my push to ensure that Ohio manufacturers and workers are able to compete on a level playing field."
The two senators co-sponsored the Leveling the Playing Field Act, which was signed into law in June. The legislation is designed to strengthen statutes that allow businesses to petition the Commerce Department and ITC for relief if foreign producers are selling goods in this country below market price or are receiving illegal subsidies.
On the same day that the Commerce Department ruling was being announced, Glatfelter Chairman and CEO Dante Parrini was telling investors on the company's fourth-quarter earnings call that the final three months of 2015 was a "solid finish to a challenging year." Adjusted quarterly earnings were 52 cents per share, marking a boost of 16 percent over the same period in 2014, with all three of its business units improving their operating profit.
The Specialty Papers division, of which the local Glatfelter plant is a part, saw shipments increase 3.5 percent, while shipping volumes across all three divisions was up 8 percent. Production volume increased 19 percent with less machine downtime needed in meeting stronger demand, and cost benefits were realized with less spending needed on maintenance and ongoing cost-reduction initiatives. As a result, operating profit overall improved 17 percent.
In Specialty Papers, the negative impact of falling market prices was offset by lower costs in raw materials and energy, helping produce a $300,000 boost in operating profit compared with the October through December period in 2014. Expectations are high for 2016, with first-quarter shipping volume expected to be similar to the fourth quarter of 2015.
In terms of the Chillicothe plant specifically, the company noted that it expects to spend between $40 million and $45 million in capital this year and into the early part of 2017 as it moves toward finishing boiler conversion projects in Chillicothe and at a plant in Pennsylvania. Another $7 million is expected in startup costs to test and push the boilers into operation, with the one in Chillicothe expected to be up and running first.
The boiler projects come in response to specific regulations in the federal Clean Air Act that require changes in some of the fuels used to power the plants, according to the company. The change involves a move from coal-power boilers to those using a cleaner-burning natural gas.